Yahoo Finance New TSB current account deal pays £164 a year - should I switch?
A new offer from TSB means that current account customers can earn up to £164 a year in interest and cashback, for new customers who apply after March 1.
TSB has introduced a new cashback incentive of up to £10 a month to those who open its Classic Plus account. Customers who make 20 debit card transactions in a month will be paid £5 a month. A further £5 will be paid if two direct debits are set up.
The new cashback perk is only offered to new customers and will stop in July 2018.
TSB also pays 3pc on account balances up to £1,500, which means savers could earn up to £165 a year, provided they meet the criteria.
At least £500 must be paid into the account each month and customers must register for online banking, paperless statements and paperless correspondence to earn the interest.
Is this now the best current account deal?
Despite a spate of cuts towards the end of last year, high interest current accounts still offer some of the best rates on the market.
However most come with restrictions. For example, there are usually minimum payments to be made and providers that offer the higher rates will limit how much can be saved into the account.
This means the best current account for you depends on the size of your savings.
The TSB account is best suited to those with small balances and who use their debit card for most of their transactions.
Without the cashback, the account only pays £45 a year, with the maximum £1,500 balance.
Those with larger funds would be better off with Santander's 123 account.
This pays 1.5pc on balances up to £20,000 - customers with the maximum deposit could earn £300 a year, or £240 once the £5 monthly fee is paid.
The account also offers up to 3pc cashback - 1pc is offered on water bills and council tax and the first £1,000 of a Santander mortgage each month, 2pc is paid on gas and electricity bills and 3pc can be earned on mobile and landline phone bills, broadband and TV packages.
The account must remain in credit, £500 must be paid in each month and you must have at least two direct debits.
When Santander cut its rate from 3pc to 1.5pc, we crunched the numbers to find out how it stacked up against other accounts, depending on your balance and cashback. Those who maximise Santander's offering could earn a huge £348 a year.
Nationwide offers the highest rate on the market. Its FlexDirect account pays 5pc on balances up to £2,500 for 12 months.
This would pay out £122.50 at the end of the year period. Savers must credit the account with at least £1,000 a month.
The Club Lloyds account pays 2pc on savings up to £5,000, which would yield £100 a year. This is less than TSB account if the cashback perks are included, but more than double what it pays in interest.
To qualify for the Club Lloyds account, customers must set up two direct debits and pay in £1,500 a month - otherwise a £5 monthly fee applies.
For more, see best high interest current accounts.
Should I switch?
Account switching numbers aren't particularly high, according to Andrew Hagger, from Moneycomms, the personal finance site. He said TSB's new incentive is "unlikely to cause a stampede".
For some the 20 monthly debit card transactions would be fairly high, which would cut potential annual earnings by £60 a year, he said.
Mr Hagger also pointed out that TSB's new incentive was designed to encourage customers to be active and "actually use it" as a current account - rather than just a place to stash their savings.
By doing so, the bank is able to forge more of a relationship with the customer - which means it is able to cross sell other accounts and services, such as mortgages, insurance and Isas.
Your 2017 bank resolution: switch accounts and earn £200
He said: "If you're an active customer the bank will be able to learn a lot more about you, your finances and your spending habits. It can then use this to sell you other things.
"We may find that other providers begin to offer similar incentives. It's a good way of getting information."
